Introduction: The Importance of Flexibility in Employee Benefits

In today’s dynamic work environment, employees often experience life changes that necessitate adjustments to their benefits. Understanding the qualifying events under IRS Section 125 Cafeteria Plans qualifying event is crucial for both employers and employees to ensure compliance and maintain optimal benefit structures.

Health Sphere’s Core360 plan stands out by integrating Section 125 with a fully managed Preventative Care Management Plan (PCMP) and Self Insured Medical Reimbursement Plan (SIMRP), offering one of the most compliant and benefit-rich programs available.

What Is an IRS Section 125 Cafeteria Plan?

An IRS Section 125 Cafeteria Plan allows employees to choose between taxable and non-taxable benefits, such as a health plan, using pre-tax dollars. This structure provides tax savings for both employers and employees. However, once elections are made, they are generally irrevocable for the plan year unless a qualifying event occurs.

Defining a Qualifying Event

A qualifying event under a Section 125 Cafeteria Plan is a specific life circumstance that permits an employee to make changes to their benefit elections outside the standard open enrollment period. These events are governed by IRS regulations and must be consistent with the change in status.

Common Qualifying Events

The IRS recognizes several events that may allow for mid-year election changes:

•  Change in Legal Marital Status

 

• Marriage

• Divorce or legal separation

• Death of a spouse

•  Change in Number of Dependents

 

• Birth or adoption of a child

• Death of a dependent

• Change in Employment Status

 

• Starting or ending employment

• Transitioning from full-time to part-time or vice versa

• Unpaid leave of absence

• Dependent Becomes Ineligible

 

• A child reaching the age limit for coverage

• Loss of student status

• Change in Residence

 

• Moving to a location that affects eligibility for current benefits

• Significant Change in Cost or Coverage

 

• Substantial increase in premium costs

• Loss of coverage under another plan

The 30-Day Window: Acting Promptly

Employees must typically notify their employer and request changes within 30 days of the qualifying event. Failing to act within this window may result in the inability to adjust benefits until the next open enrollment period.

How Core360 Simplifies Compliance and Boosts Culture?

One of the biggest challenges for employers navigating IRS Section 125 cafeteria plan qualifying events is compliance complexity. Every mid-year change requires documentation, IRS alignment, and benefit updates—all while keeping employees informed. With Core360, that headache disappears.

Core360 offers automated tracking of qualifying events, making it easy to adjust coverage when employees experience a status change. Whether it’s a marriage, the birth of a child, or a dependent aging out of a plan, Core360’s automated system ensures the change is reflected immediately without extra admin effort or compliance risk.

This seamless process gives employers confidence that their benefits remain compliant and up-to-date, while delivering a better experience for employees. And when teams feel their employer is proactive, caring, and responsive to life’s changes, that boosts loyalty and strengthens company culture.

Core360 Helps You Build a Family-First Workplace

Life happens, and benefits should keep up. Core360 does more than save money. It supports a family-first approach to company culture by offering coverage options that extend to spouses and dependents, include 24/7 access to care, and provide employees with the flexibility to manage their benefits as their lives evolve.

Employees don’t just want better benefits. They want benefits that work with their real lives, and Core360 delivers.

How Core360 Enhances Flexibility and Compliance?

Health Sphere’s Core360 plan leverages Section 125 alongside PCMP and SIMRP to offer a comprehensive benefits solution. This integration ensures:

• • Employer Benefits:
    • Approximately $600 savings per W-2 employee annually

    • No out-of-pocket costs

    • Reduced healthcare claims (average $1,400 savings over three years)

    • Fast, automated rollout within 4-6 weeks

    • Intensifies employee retention and performance

    • Immediate positive impact on the bottom line

• Employee Benefits:

• • 3–4% net paycheck increase (approximately $100 per month)

  • $0 copay for Telehealth, wellness, and mental health services

  • Access to Mayo Clinic tools and health dashboard

  • Coverage for Universal Life, Disability, and Critical Illness

  • Spouse and dependent coverage

More than 40,000 employees are already enrolled in Core360, benefiting from its robust and flexible structure.

Health Sphere’s Commitment

Health Sphere is dedicated to helping companies improve employee well-being and reduce tax waste—without adding cost or altering current benefits. Our mission is to impact over 250,000 employees by providing real, preventative health benefits that come with no out-of-pocket cost, no impact on employee pay, and, in many cases, result in higher net take-home pay. We believe better benefits should be simple, compliant, and truly beneficial for everyone.

Empowering Employers and Employees

Understanding IRS Section 125 Cafeteria Plan qualifying events is essential for maintaining compliance and ensuring that employees can adapt their benefits to life’s changes. Health Sphere’s Core360 plan not only accommodates these events but enhances the overall benefits experience through its integrated, compliant, and cost-effective approach.

Take the Next Step

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